Industrial and Provident Societies (Amendment) Bill, 1978: Committee and Final Stages.

Section I agreed to.
SECTION 2.
Question proposed: "That section 2 stand part of the Bill."

Section 2 is a definition section and it contains a definition of the word "officers". I wonder if the Minister would get his Department to look at the Bill from the point of view of whether the wording is uniform. My eye lit, for example, on section 28 (3) in which there is a reference to an "official". It may not be a point of much substance but the usage in the Bill should be uniform. If there is a difference of any significance between "officers" and "official" it might be well to express it.

Question put and agreed to.
Section 3 agreed to.
SECTION 4.

I move amendment No. 1:

In page 4, between lines 33 and 34, to insert the following subsection:

"(3) Notwithstanding subsection (2), the Registrar may, after consultation with the Minister for Agriculture, give a certificate to a society entitling it to be treated, for the purposes of this section, as an agricultural co-operative society.".

The amendment proposed is in response to representations received from Bord Bainne with the support of the Department of Agriculture. It was represented that the definition of "agricultural co-operative society" in subsection (2) might not be held to include An Bord Bainne Co-operative Limited as their members are not engaged in farming nor do they derive the principal part of their livelihood from farming. The members consist mainly of agricultural cooperatives who themselves would fall within the relevant definition. The IAOS is a similar organisation that would be covered by the arrangement that is proposed in the amendment. It has been drawn up on the lines of section 220 (2) of the Income Tax Act, 1967, as it is not the intention of Part II of the Bill to cause any difficulties for promotional or umbrella organisations of the kind I have mentioned which do not accept deposits. It has been decided to accommodate their exclusion on the lines which they have suggested.

I wonder if the purpose of the amendment is to try to shore up what seems to be a weakness in the section, as I pointed out in the debate on Second Stage, in regard to the use of the word "insubstantial". It seemed that perhaps the power which was being given to the registrar was expressly intended to empower him to exercise a discretion in regard to what was substantial and what was not. It did not occur to me that it might have a specific purpose in regard to one body, such as the Minister has mentioned. The Minister's amendment does give the registrar a dispensing power in regard to the criteria which the section contains. There is no limit on the dispensing power. It is not even required that the body which he should be dispensing should have any agricultural complexion to its activities, even to the extent that Bord Bainne has. If the Minister's amendment becomes law I am not going to oppose it, but I should like him to think about it. If the amendment becomes law it will empower the registrar to create an artificial constructive agricultural co-operative and not subject it to any requirement that the body being exempted should have any agricultural operations at first, second or at any hand. I wonder whether the Minister would consider extending this amendment, perhaps on Report Stage, so as to impose some kind of limit on the exercise of this otherwise general dispensing power contained in the registrar's discretion.

The Deputy's argument pre-supposes that the registrar will deliberately go out of his way to find societies which have nothing to do with agriculture in order to exempt them. That is not the case at all. He is only going to use the power in a case such as Bord Bainne or the IAOS, and only after consultation with the Minister for Agriculture, which, in practice, means with the agreement of the Minister for Agriculture. There is no question of non-agricultural societies being exempted. The registrar is there to exercise his powers in the public interest. He would not be serving the public interest if he used the power in the way in which the Deputy suggests he might use it. That would be an abuse of his power and would not have the consent of the Minister for Agriculture.

I agree that it would be an abuse of the power. The law reports, as the Minister knows, are full of examples of perfectly respectable administrative organs and authorities of all kinds, including people of at least the same dignity as the Registrar of Friendly Societies who have exceeded their powers, not in the letter but in the spirit because the statutory provision under which they were operating was not drawn tightly and clearly enough to show them what they were entitled to do. I accept that the representation made to the Minister is bona fide and I am not expressing any suspicion about it. However, it would have been a better drafting and legislative job had the dispensing power been more tightly drawn.

Amendment agreed to.
Section 4, as amended, agreed to.
SECTION 5.

I move amendment No. 2:

In page 4, subsection (3) (a), line 46, to delete "after consultation with the Central Bank" and substitute "subject to approval by the Central Bank."

My reason for introducing this amendment is that it relates to the time limit on both the acceptance and the holding of deposits by the larger existing industrial and provident societies. The Minister still retains a direct power after consultation with the Central Bank. He may, by regulation, extend the period of five years to such further period or periods as he considers appropriate, having regard to the public interest. The purpose of my amendment is to reduce to a greater degree than is now contained in the section the power and ultimate responsibility of the Minister. In a Bill of this nature I consider it undesirable that there should be a reserve power of such strength residing directly with the Minister. It is quite conceivable that a society may, after putting forward a scheme to the registrar, find itself in some difficulty and may then decide how best to twist the arm of the Minister. It may not at all be in the best national interest that the arm of the Minister should be twisted.

All sorts of hard luck stories are trotted out—hundreds of depositors who are going to lose a fortune and the society decides to chance its arm. Admittedly, the Minister has the power to consult the Central Bank, but there are consultations and consultations. I propose to place that power more firmly within the confines of the Central Bank while at the same time the Minister naturally in the whole context of this Bill —since it is not an amendment of the 1971 Act—would still be obliged subject, to approval by the Central Bank, to extend that period in the public interest.

I have no doubt that the Central Bank would also have considerable regard to the public interest, but the kind of thing I have in mind is where one of the societies wrote to Deputies on 16 October—I do not propose to give the name of the society but I shall pass the letter over to the Minister afterwards —saying:

RE Industrial and Provident Societies Bill

The above Bill proposes to stop societies such as ours taking deposits. These societies probably now have over £20 million in deposits and employ a considerable number of people. They mainly lend money for leasing, house deposits and commercial properties.

Many of the depositors are from the United Kingdom where most of the societies have offices. In the United Kingdom the new Banking and Credit Union Bill of July 1978 command 7303 proposes to licence institutions such as ours and provide for a protection deposit fund. The British have no intention of closing us down.

We are writing to ask you to have the bill amended to bring it more into line with the British Bill which has been carefully researched. Credit institutions from other member states of the EEC will have an automatic right of establishment. The first directive of last year is a start in this direction (77/780/EEC).

Why should we be forced to move to Britain or Northern Ireland and eventually return as British companies under EEC law?

Would the Deputy give the reference?

The letter is dated 16 October. I do not propose to name the investment society unless the Minister so wishes.

It is normal, if the letter is read out, to say where it is from.

The letter is from a Mr. John Magauran, Central Trust Investment Society Ltd., Central Trust House, 19 Northumberland Road, Dublin 4. It is a "Dear Deputy" letter, one doing the rounds——

Not a "Dear Barry" one?

No, I keep the few overdrafts I have elsewhere. That letter to me is reminiscent of the kind of expressions we had when we were being berated in the previous Government and asked to pay back the money to the Irish Trust Bank, that type of special pleading. The temptation is there for the Minister to say "I shall give you another 12 months" or "I know there is a general election coming up. We will give you another two years in which to bring forward another scheme of closure and cessation of business." It is a great thing these days when somebody comes to you and says: "I am in serious trouble —can you do anything?" to be able to reply: "There is the Director of Public Prosecutions; we dare not interfere." That is why we have a Director of Public Prosecutions. Likewise in these days of planning applications one can say "It is a matter for An Bord Pleanála." In relation to a Bill of this nature the Minister or any Deputy in Opposition should rightly be in a position to say "It is a matter for the Central Bank. If they want to give you an extension of 12 years, by all means let them." It will be their decision and we shall not be involved in it in a political context.

I fully support the Bill. We shall be taking all Stages of it today, I would hope. That is the only amendment I wish to suggest for consideration by the Minister. Perhaps he might even look at it on Report Stage?

Essentially, there is very little difference between what is in the Bill, "after consultation with the Central Bank" and what the Deputy proposes "subject to approval by the Central Bank". In practice there is really none because, speaking for myself, if I were in this position at the end of the five year period I would not make any decision one way or the other on any such request without the advice of the Central Bank and, in fact, I might say in such a matter without following their advice, because I would regard them as the proper people to advise me in respect of it.

While the amendment is of no great practical significance I feel I should not accept it because the proposed change would effectively and, in my opinion, quite unjustifiably subordinate the office of the Minister to the Central Bank. I am responsible for legislative initiative so far as societies are concerned. In the matter of regulations which impinge on or qualify legal requirements, I think I should also be the overriding and decision making authority. The Minister of the day is directly accountable to the Oireachtas in the matter of legislative changes and the sort of decision involved here. The Central Bank is not. Because of their recognised responsibility for the banking sector a special consultative role has been written into the Bill for the Bank where a time extension arises. The Bank however might not be the only agency which would have a valid opinion to express regarding such a request. The Registrar of Friendly Societies might have an opinion and one would expect him to be consulted also as a matter of course.

I do not know whether these societies will still be operating at the end of the five year period. Naturally, I would hope there would not be any still taking deposits or holding them at that time. Certainly the registrar will seek to encourage societies to take one of the various steps open to them after the passing of this Bill in order to arrive as speedily as possible at a situation where it would not be any longer necessary for them to take or hold deposits. I hope the registrar will be successful in taking most, if not all, of the societies into that position and that at the end of five years there will be none left in that situation.

If, by any chance one or two will still hold deposits at the end of the five years, I think the principal consideration at that stage in deciding whether or not to allow an extension of the winding down period so far as deposits were concerned would be the protection of the depositors themselves. One's natural inclination would not be to extend the period. If it could be shown, and the Central Bank so advised, that a cessation of activities so far as deposit taking was concerned at the end of five years was likely to lead to insolvency or a failure of the society to repay the deposits which it had, then the Central Bank would be likely to advise, and the Minister of the day would be likely to accede to that advice, that some extension should be given.

It is not a matter of any great importance to anyone other than the depositors. It is not a situation in which one could envisage the proprietor of one of these banking societies seeking to have an extension for reason of profit, because at that stage there would not be any profit in it for them. Almost daily I find myself called on to make decisions which are a great deal more difficult and on which, potentially at least, I would be open to a great deal more pressure than the sort of situation Deputy Desmond envisages here. I would not regard it as a serious difficulty at all.

In practice the Central Bank will be fully consulted as the section envisages. It may well be that, by the end of the five year period, all the societies carrying on quasi banking activities at the moment will have been diverted away from those activities and will have made alternative arrangements for funding and so on.

Amendment, by leave, withdrawn.
Question proposed: "That section 5 stand part of the Bill."

This is only the first of a few such instances in the Bill to which I want to draw the Minister's attention. Section 5 is one of the sections which the offences section at the end of the Bill mentions. It is one of the sections mentioned in section 28. The opening words of section 28 (1) are that a person shall be guilty of an offence if he contravenes section 5. I want to make the point briefly that the drafting of that section is too broad. I have not abridged it in any sense. I just stopped at the words "section 5". As it stands, the Minister will find he is possibly laying himself open to a criminal prosecution inasmuch as presumably a regulation under paragraph (c) of subsection (3) can be laid before this House and the other House only by himself and, if he fails to lay this regulation as soon as may be after it is made, he is contravening the section.

I am as alive as anyone else to the absurd position in which the Minister would find himself if that were taken literally in the way I have outlined it. As we go through the Bill, the Minister will find there are several mandatory provisions in the sections which are referred to in section 29 in the context of their possible contravention. Here is an instance in which potentially he might be caught. There are other instances which I will point out as we go through the Bill, in which the registrar is under a mandatory duty of one kind or another and the section which imposes that duty on him is one of the sections caught by the offences section, section 28, and by the provision that anybody who contravenes this, that or the other section is guilty of an offence.

What is wrong is nothing in section 5. I have no objection to that. The point I am making may show the Minister that the drafting of section 28 needs to be improved.

I have noted what the Deputy said and I will refer to it again on section 28.

Question put and agreed to.
SECTION 6.
Question proposed: "That section 6 stand part of the Bill."

This is a better example because it is less absurd and more specific. Subsection (2) says:

The Registrar shall not give permission under this section unless he is satisfied that it is in the interests of the public or of the creditors of a society or of the orderly and proper regulation of the business of the society to do so.

A registrar who gives permission, notwithstanding the fact that he is not satisfied, or, as is more usual in such an administrative context, notwithstanding that he has no evidence before him on which he could possibly be satisfied, is, I think we will have to say, in contravention of section 6. I quite realise that the people being aimed at in the offences section are societies, their officers, their committee members, and so on. If so, that section should say so. As it stands, a registrar who neglects his duty and gives permission, notwithstanding that he is not satisfied because he could not be satisfied, is in contravention of the section and would make himself theoretically liable to prosecution. I am certain that is not the intent of the Bill and it should be cleaned up.

In case the Minister thinks I am posing an absurd situation I want to assure him that if he wants me to—and I am certain the draftman will easily have access to them—I can produce at least a dozen Irish cases over the past couple of decades in which administrative authorities, of which this registrar would be one, have found their acts or decisions invalidated because, although on paper they purported to be satisfied with something, or although they declared themselves as having considered this, that or the other, arguments produced by the party affected by what they did, showed they could not have been satisfied about anything because they never directed their minds to it, never considered it, neglected to consider the very matter which the statute required them to consider.

In other words, I am not positing a malicious or malignant registrar. Not at all. What I am positing is a registrar who, perhaps through stress of overwork or misconstruing his functions, has not in fact directed his mind to the factors which would enable him to satisfy himself about this or that. A registrar who without so satisfying himself gives permission is clearly in contravention of his duty under section 6. That is a common occurrence in the world of administration, but it is a criminal occurrence here, it seems to me, as section 6 stands in conjunction with the offences section.

I suppose on a strict reading of section 28, by stretching the matter rather a long way, one could say Deputy Kelly is right. It is quite obvious section 28 refers to subsection (1) and not the subsidiary matters. The offence is set out in subsection (1): raising funds except under and in accordance with the written permission of the registrar.

The mandatory nature of the conduct which is required by subsection (1) is expressed in the very same words as in subsection (2): the society shall not raise funds, and the registrar shall not give permission. I know what the intent of the Bill is. I am urging the Minister as we go along to ask the draftman to look again at the offences section. It is not a clean job.

Question put and agreed to.
SECTION 7.
Question proposed: "That section 7 stand part of the Bill."

This also is one of the sections which section 28 envisages. While the same problem does not arise under it, it would be well, if that is the Minister's intention, to signal, perhaps not in the Bill but in some other appropriate way, that as it stands a society which allows the deadline of subsection (2) to pass is in contravention of section 7 and an offence would appear to have been committed. Does the Minister intend that merely letting the deadline pass should be a criminal offence? If that is the intention, I have no objection, but I am not sure that is the Minister's intention.

It is necessary there should be some form of sanction——

Fair enough.

——to ensure the deadline does not pass. It is stretching the term somewhat to describe the sanctions proposed, or failure to comply with the provision, as a criminal offence. It suggests some thought of mens rea or fraudulent intent. That is not so. It is a form of administrative sanction to ensure people will act expeditiously in the interests of their depositors.

I do not disagree with that but, if I were told the material of an offence was concealed somewhere in section 7, I would have thought that it was in subsection (3). Perhaps the Minister intends it should attach to subsection (2) as well. I have no objection. I just direct the Minister's mind to what is going on.

Question put and agreed to.
SECTION 8.
Question proposed: "That section 8 stand part of the Bill."

The same consideration arises here under subsection (2) because again the registrar could conceivably be in contravention of this section if he has given a permission without consultation with the Central Bank. That is also a fairly common occurrence. Certain cases reach the Law Reports but there are many cases that do not get that far, cases where the statutory authority required to consult the other person takes the consultation for granted. Consultation does not take place and, if it does not take place here, the nominal effect of section 28 is to make the registrar guilty of an offence.

Question put and agreed to.
Sections 10 to 12, inclusive, agreed to.
SECTION 13.
Question proposed: "That section 13 stand part of the Bill."

May I point out that there is a misprint in line two on page 8?

Question put and agreed to.
SECTION 14.

Amendments Nos. 3 and 4 are cognate and may be discussed together.

I move amendment No. 3:

In page 8, to delete lines 12 to 19 and substitute the following subsection:

"(2) If any person who is an officer, member, agent or servant of the society refuses to answer any question put to him by the inspector with respect to the affairs of the society, the person shall be guilty of an offence under section 28.".

Arising out of a Supreme Court case in 1971 in re Haughey, it was felt necessary to amend subsection (2) to provide that failure to answer questions put by an inspector carrying out an investigation into one of these societies should not be regarded as contempt of court and should not be reported to the High Court, but should instead be regarded as prima facie evidence of a minor offence triable summarily in the District Court in respect of which evidence would be given in the District Court and a decision by a district justice. The Supreme Court felt that if a matter such as this were referred to the High Court there was no limit on the penalty the High Court could impose and therefore the person who was reported had a right to a trial by a jury. Since there is no provision in the High Court to try criminal cases such a person would have to be tried in the Central Criminal Court. It was found that the procedure was defective and it is proposed to get over the difficulty by making it a minor offence subject to the penalties laid down in section 28.

That explanation is not entirely convincing and it is as well to get this clear. It does not say that failure to answer questions, and so on, shall be a minor offence. It talks about an offence under section 28 and in that section the discretion resides purely in the State—I presume in the Director of Public Prosecutions—to decide whether to prosecute summarily or before a jury. In an extremely serious case where an attempt might be made to conceal a major fraud it may very well be that the offence would appear to the State to warrant trial before a jury and that would remove the ceiling in terms of penalty. I see the point of the amendment. I raised this matter on Second Stage and I certainly agree with the form in which it stands.

Amendment agreed to.
Question proposed: "That section 14, as amended, stand part of the Bill."

Again, I think section 28 will have to be looked at because of this amendment. It enumerates nine sections where contraventions are to represent an offence but these nine sections do not now include sections 14 and 23.

But sections 14 and 23 specifically say that any contravention of them is an offence under section 28.

That is perfectly true. It does not cause me or the Minister any problems but only God knows what it would cause some defendant in the future. I think section 28 ought to be tidied up. I will not try to amend it on my feet.

Not at this point.

Where we are specifically relating to section 28 and find a whole lot of other sections are mentioned, but not these two, I think the Bill will be untidy.

Question put and agreed to.
Sections 15 to 22, inclusive, agreed to.
SECTION 23.

Amendment No. 4 has already been discussed with amendment No. 3.

I move amendment No. 4:

In page 13, to delete lines 12 to 19 and substitute the following subsection:

"(2) If any person who is an officer, member or agent of the credit union refuses to answer any question put to him by the inspector with respect to the affairs of the credit union, the person shall be guilty of an offence under section 28.".

Amendment agreed to.
Question proposed: "That section 23, as amended, stand part of the Bill."

The very last provision in this section provides:

Where the Director of Public Prosecutions institutes proceedings consequent on the receipt by him of a report under paragraph (a), it shall be the duty of all officers, members and agents of the credit union (other than a defendant in the proceedings) to give him all assistance in connection with the prosecution which they are reasonably able to give.

As far as I can see, no sanction is provided for a breach of that duty, while the Bill in other places makes it an offence to withhold information or obstruct or fail to assist inspections. This duty appears to hang in the air. There may be provision in some other statute. It does not seem to be anything but a nominal paper breach of duty to refuse to give the DPP the help mentioned here.

Question put and agreed to.
Sections 24 to 27, inclusive, agreed to.
SECTION 28.
Question proposed: "That section 28 stand part of the Bill."

I have mentioned this section several times. What I have been saying relates to paragraph (a) of sub-section (1). I wonder if the Minister would get the draftsman to look at the very first line in section 28 (1) which states:

A person shall be guilty of an offence if he——

The entity envisaged as committing an offence throughout this section is a person. I know that the word "person" can be interpreted to include a juristic person, in other words, not a natural person. Many of the duties, the breaches of which are made offences by this Bill, are duties laid upon society, which is also a person in a sense. Some of the kinds of offence mentioned in section 28 specifically are ones which it requires a natural person, a man or woman, to commit. Perhaps the opening words of that section might be expanded. The 1893 Act, which is to be construed as one with this, provides in section 63:

Every offence by a society under this Act shall be deemed to have been also committed by every officer of the same bound by the rules thereof to fulfil the duty whereof such offence is a breach or, if there be no such officer, then by every member of the committee of the same, unless such member be proved to have been ignorant of or to have attempted to prevent the commission of such offence.

That is not quite the same as saying that an offence by a society must be deemed to be an offence by the persons composing it. It just says that an offence by a society shall be deemed to have been also committed by every person of which the section specifies, except in so far as he can exculpate himself. The onus is displaced. Where we are talking about offences which are committed in terms of the sections here, by societies, it would be clearer if the opening words of the section were expanded so as to make it plain in terms that everyone can understand that the person here envisaged is not simply a person in the broadest sense but one of the special kinds of juristic person to which the Bill is supposed to apply.

It has been long established that in legislation the word "person" includes all legal entities. I think the Interpretation Act of 1938 bears that out. My recollection is that it does. The fact that the word "person" as used here encompasses bodies corporate is proved by the opening of subsection (3) of this section which states:

Where an offence under this Act is committed by a body corporate or by a person purporting to act on behalf of a body corporate....

Subsection (3) is not an interpretation subsection.

It is not, but it envisages offences by bodies corporate.

There is no question about that. What the Minister is trying to prevent is societies doing this, that and the other. It seems that it would have been clearer to say so.

I suggest that the word "person" includes an industrial and provident society or a company or any other entity.

Question put and agreed to.
Agreed to take remaining Stages to-day.
Bill reported with amendments, and passed.